social security in inda: historical development and labour...

Social Security in India: Historical Development and Labour Policy

108

Chapter-4

Chapter 4

SOCIAL SECURITY IN INDA: HISTORICAL DEVELOPMENT AND

LABOUR POLICY

4.1. Pre-constitutional Era and the Roots of Social Security

4.2. Analysis of Social Security in Independent India

4.3. Labour Policy, Social Security and Five Year Plans

4.4. Conclusion

The underlying idea behind social security measures is that there

is a duty on the society to protect the working class that contributes to

the welfare of the society against hazards1. It protects not just the

workman, but also his entire family in financial security and health care.

The social security can be provided by institutional and non-

institutional agencies. The non-institutional agencies existed from time

immemorial and they are the back bones of the present social security

programmes. India is a good example of having non-institutional form

of social security measures in the world. The needy and unfortunate are

seen protected in joint family set up and the caste system. The hardship

due to unemployment, economic difficulties, old age, widowhood etc.,

1. Prof. Harry Calvert, Social Security Law, Sweet & Maxwell, London (1978), p.38.

Co

nte

nts


109

Chapter-4

was taken care of by joint family system. It had a religious backing also.

An additional help from individual and institutions was provided to

them through the guilds, community and Panchayats, orphanages,

widow homes and charity centers available during that time. This

indicates that India had its own social security system2 of (1) self-

sufficient village economy; (2) caste system; (3) joint family system;

(4) organizations of charity. Following the development of liberalism

and individualism fostered by the western influence, these roots of

Indian society were shaken and ultimately lost its significance. The

society, its culture and custom were affected a great deal by the foreign

impact and a new society based on class gradually emerged.

Industrialisaton created a new class and this rising up class with its rural

background and without social and material resources urgently

necessitated systematic help from various social security agencies other

than the traditional ones. The ideals of social security ultimately

became a social responsibility largely depending on the resources and

needs of the country. India is a country where economic resources are

less and needs are more. The social security enactments that we find

today in India are an amalgam of the ideals and principles emerged over

the years.

4.1 Pre-constitutional Era and the Roots of Social Security

In the early historical times, people were living in a more secured

or protected environment. As stated above, the system of the joint

family, the guilds, the caste, and community panchayats and religious 2. Mamuria and Doshi, Labour Problems and Social Welfare in India, Kitab Mahal Pvt.

Ltd., Allahabad (1966), p.339.


110

Chapter-4

institutions have been providing protection to individuals from the evil

consequences of various contingencies. The development of modern

state totally changed the social set up in India and the state assumed the

role of protector of people from evils. The philosophy of welfarism has

resulted in legislative schemes designed to channel all economic

activity for collective good.3 Originally, labour law was almost a part of

private law but now it has become part of public law.

From the middle of 19th Century to the end of First world war, the

Indian industrial legislation was in the period of origin. It was through

a slow and steady process that the industrial law took root in India. The

Apprentices Act figures the first law introduced in India relating to

labour.4 It was enacted for better enabling children to learn trades,

crafts and to seek employment by which when they come to full age,

they may gain a livelihood.5

Cotton mills and jute mills that have been established during

1850s marked the beginning of factory system in India.6 The condition

of workers in those mills were pathetic due to long working hours

without any safety and security. Based on the principles of torts, Fatal

Accidents Act, 1855 was enacted for providing compensation to legal

3. See. Supra n. 1.

4. S.R.Samanth, Industrial Jurisprudence, M/s.N.M.Tripathi P.Ltd., Bombay, at p.54.

5. Preamble, The Apprentices Act.

6. Factory system (India) Report of the Commission, question by Mr Anderson and replied by Lord George Hamilton, HC Deb. 10 April 1877 Vol. 233. See, http://hansard.millbanksystems. com.commons/1877


111

Chapter-4

heirs of these employees where death occurred by an actionable wrong.7

Minimum rate of compensation, to some selected legal heirs and a

restricted application were the main drawback of the said Act.

In 1859, Indian Merchant Shipping Act was passed. This Act was

envisaged for regulating employment of seamen and to provide for their

better health. In the same year Workmen’s Breach of Contract Act was

passed which provided for criminal penalties for workers for breach of

contract of service. In 1860, Employers and Workmen (Disputes) Act

was passed and it provided for speedy and summary settlement of

disputes between employers and workmen.8

By 1881, factory system clearly emerged in India, but workers did

not organize themselves simultaneously with the industrialization. The

safety and working conditions of these workers were prime concerns for

many members of the House of Lords and they argued for a legislation9.

Thus in 1881, Indian Factories Act10 was passed. In order to improve

the conditions of plantations labours, Island Emigration Act 1892 and to

secure safe and healthy conditions of work in mines, Indian Mines Act,

1901were passed.

It is evident that, all these early legislations were enacted in

connection with specified classes of industries and did not extend to the

7. Compensation was given only if it is proved in the Court of law that the accident was

not due to obvious neglect of workers.

8. This Act was the forerunner of Industrial Disputes Act, 1947 which played an important role in modern industrial life.

9. See supra n. 6

10. It was re-enacted in 1911.


112

Chapter-4

entire working class. The majority of the measures adopted were related

to railways, shipping, factories, and mines. The progress of both industries

and industrial laws was haphazard and inadequate. The attitude of

government towards the workers legitimate rights was that of opposition

and non-interference.11 It was sincerely believed that any interference in

employer employee relationship would prove detrimental to both parties.

This might be the reason for industrial enactments passed during this

period happened to be limited. These were also scattered, limited in scope

with respect to their coverage, and of minor importance and conservative

in nature.

During and after the first world war period, there had been

tremendous change in the attitude of state and society towards labour.

ILO was established in 1919 which aimed at welfare of workers globally.

India is a member since its inception. ILO has adopted many conventions

and recommendations casting different types of liability on industry,

Government and labour.12 Under the Montague-Chelmsford Reforms in

1919, the central legislature was given definite legislative authority to

enact industrial laws. Using that power, in 1923, India passed a major

enactment called Workmen’s Compensation Act, 1923, with an object to

eliminate hardship caused to workmen injured, through providing prompt

payment of benefits regardless of fault from their side and with

minimum legal formalities. It imposed obligation upon employers to pay

compensation to workers for accidents arising out of and in the course of

11. Laissezfaire was the ruling doctrine of the day.

12. Among them India ratified only 3 conventions relating to workmen’s compensation, on occupational diseases and equality of treatment in accident compensation.


113

Chapter-4

employment and for death and disablement13. In 1925, Government of

India enacted another Act, Provident Fund Act, 1925.14 Royal

Commission on Labour was appointed in 1929 which recommended a

scheme for health insurance to industrial workers on a contributory

basis (financed by employers along with small deductions from the

wages of workers) and provisions against old age and payment of

gratuity.

The Government of India Act, 1935 laid down the subjects on which

Federal Legislature could pass industrial laws. During this period,

industrial legislation grew in speed, volume, scope and underwent a great

change in its nature. These enactments gave coverage to major field of

industrial workers and their rights. These laws are found to be liberal as

regards their contents and coverage and having far reaching importance

and consequences. This pointed a change in governmental attitude from

toleration to encouragement of worker’s aspirations.

During the period of 1919-1942, there was a great progress in

modifying old laws15 and in enacting of new ones16. Some new

enactments were passed for specifically addressing certain industrial

13. The Act was amended 7 times during this period.

14. This Act is enacted with a view to set up a fund which is to be maintained by Governemnt and Semi-government organizations.

15. Indian Merchant Shipping Act, 1923; Assam Labour and Emigration Act, 1893; Indian Mines Act, 1901; Factories Act, 1911 improved up in their scope and object. Employers and Workmen (Disputes Act, 1860 and Indian Fatal Accidents Act, 1855 were re-enacted as Workmen’s compensation Act and Indian Trade Disputes Act.

16. Tea Districts Emigrant Labour Act, 1932; Indian Mines Act, 1923 and Indian Factories Act, 1934.


114

Chapter-4

establishments17. These were not merely intended for regulating

employment in the industries but attempted to give better conditions of

employment like shorter hours of work, weekly holidays, safety of

premises, payment for overtime, rest period and paid holidays.

All these changes18 were made mainly due to the emergence of ILO.

Apart from that, after first world war, India witnessed a rapid rise in

nationalism. The British Government also tried to accommodate and

adjust some of Indian demands. Indians were also given chance to

administration on local subjects called transferred subjects. Thus the

introduction of diarchy and rapid growth in industrialization gave more

interest in labour matters.

Another phase when many significant development in the field of

social security occurred on a firm and sound footing was the second world

war. The war created an acute shortage of man and materials. This

necessitated increased production and that required greater co-operation of

labour. To ensure this a number of concessions were made to the working

class under Defence of India Rules.19 The appointment of

Dr.B.R.Ambedkar as labour member to the Viceroy’s Council infused

keenness in government’s labour policy. In 1943, a committee called the

‘Standing Labour Committee’ was appointed by Government of India. 17. Mines Maternity Benefit Act, 1941; Indian Motor Vehicles Act, 1939; Indian Dock

Labourer’s Act, 1934

18. Children (Pledging of Labour) Act, 1933; Payment of Wages Act, 1936; Employees Liability Act, 1938; Employment of Children Act, 1938; Weekly Holidays Act, 1942 are some of the new enactments passed during this period relating to labour. These new legislations extend to the entire working class as distinguished from workers in specific industry

19. Rule 81-A.


115

Chapter-4

Constitution of this Committee and Indian Labour Conference effected

remarkable changes in the attitude of Government towards labour. The

committee was constituted for the purpose of formulating a scheme for

health insurance for individual workers. Another committee was also

appointed to make survey on the position of health conditions and health

organizations in existence. All these provided for a forum for the

discussion of labour matters. The two ILO publications viz; ‘Approaches

to social security—an International Survey’ and ‘Social security—

Principles and Problems Arising Out of War’20 highlighted the tendency

in planning social security to bring under a single scheme for assuring

maintenance in case of inability to work and to extend this to all the

employees, employed or self employed, rural or urban.

The publication of Beveridge Report in England also had a remarkable

impact on Indian scene. The Government of India made attempts to

introduce sickness benefits in India. The provincial governments were

entrusted with this task. But they doubted its success because of migratory

nature of Indian workers and difficulty in locating them in villages.

Shortage of medical staff for certification and treatment was yet another

reason. About this, the E.S.I. Review Committee observed:

“Sickness is an important contributory cause of indebtedness

with all that debt entails. Under existing conditions at the

time of greatest need the worker may find himself destitute of

resources, unable to take proper measures to restore his

20. Published in the year 1942 and 1947 respectively.


116

Chapter-4

health and in difficulties regarding even in the means of

subsistence.”21

Recommendations of the ESI Review Committee were considered

by Government of India and again referred to provincial governments.

But no evidence was available to show that these efforts would become

fruitful.

But in Bombay, the Textile Labour Enquiry Committee formulated

sickness insurance scheme and recommended in its report that a

compulsory and contributory insurance scheme in which the employer,

the workers and the state to contribute has to be put in motion at

Bombay and Allahabad initially and extended to other cotton textile

centers in the province. Though the centre forwarded such schemes to

states, none was implemented due to lack of interest of the provinces.

Government placed the matter in the First Labour Minister’s

Conference held in New Delhi in 1940. In the same year Employees

Conference held at Bombay under the joint auspices of All India

Organization of Industrial Employers and the Employees examined the

question of sickness insurance and favoured the tripartite contribution.

The decision in Second Labour Minister’s Conference held in 1941,

Third Labour Minister’s Conference held in 1942 and the ILO

Conventions and recommendations forced Government of India to

appoint a commission in 1943 under the Chairmanship of Professor

B.R.Adarkar22. The scheme formulated by him envisaged to cover only

21. ESI Review Committee appointed by Government of India in 1966.

22. The Commission filed its report in 1944.


117

Chapter-4

perennial factories belonging to textile engineering, mineral and metal

groups of industries. Government of India requested ILO to depute

experts to examine Adarkar Report. ILO deputed M/s.M.Stack and Rao

for evaluating Adarkar Report and they suggested certain modifications

relating to classification of workers, contribution benefits, and the

organization of medical services and financial structure of the scheme23.

In 1947, India became independent and an interim government

was formed which caused greater encouragement to worker’s

legitimate ambitions and accelerated harmony in the industrial

relations. The interim government formulated a five year programme

for the welfare of the labour class. The significant features of the

programme were:

(i) organization of the health insurance scheme;

(ii) revision of the Workmen’s Compensation Act;

(iii) central law for maternity benefit; and

(iv) extension to other classes of workers the right within specific

limits to leave with allowances during sickness24.

Industrial Disputes Act enacted in 1947 introduced an adjudicating

system where an industrial worker can raise an industrial dispute.

Gratuity was also considered as a cause of industrial dispute and thus

gratuity was recognized as a legal right.

23. The modified Adarkar Plan is now the ESI Act, 1948.

24. Report of the National Commission on Labour I, at p.163.


118

Chapter-4

Employee’s State Insurance Act was passed in 1948. It introduced

a scheme of compulsory health insurance and benefits in the event of

sickness, maternity and employment injury to workmen.

Mica Mines Labour Welfare Fund Act, 1946 and Coal Mines

Provident Fund and Bonus Scheme Act, 1948 were enacted and these

provided for levy of a cess on the output of the industry to finance housing

and such other projects like nutrition, provision for water supply,

educational and recreational facilities etc. of workmen employed in that

sector.

Hence, in a nutshell, the government made many efforts to

implement welfare provisions for the labour force in India, but due to

lack of interest of provincial governments in its implementation and

supervision did not yield the intended result.

4.2 Analysis of Social Security in Independent India

The socio-economic conditions of the poor and working class in

India were highly depressing. Various committees and reports stressed

those facts in different fora whenever they could. The submission

before Constitutional Reforms Committee explained the pathetic

condition and the necessity to ensure the right of workers. It said that

certain fundamental rights of the working classes should be specifically

declared so that Indian Parliament should make suitable laws to ensure

fair rent and fixity of tenure to agricultural tenants from whom

industrial workers are recreated, for the maintenance of health and

fitness of workers, securing a minimum wage for them, the protection

of motherhood, welfare of their children and the economic


119

Chapter-4

consequences of old age, infirmity and unemployment25. This is a part

of the memorandum submitted to the sub-committee of Joint Committee

on Indian Constitutional Reforms in 1933 and gave evidence that the

priority to the right of labour included social security of labour also.

Another memorandum submitted by Mr.Shiv Rao on behalf of

National Trade Union Federation to the same Committee contained

demands such as the Constitution should contain a declaration of

fundamental rights guaranteeing to all citizens of the federation inter alia,

freedom of speech, freedom of press, freedom of association, and in case

of workers the right to strike, the right to work and provisions against old

age invalidity etc., in view of the experience that the Indian workers have

had with regard to the treatment meted out to them and their organizations

during industrial disputes. The federation was convinced of necessity of

insisting upon such fundamental rights being guaranteed in the interests

particularly of the working classes26.

These two memorandums are reiteration of the resolution adopted

in April 1933 by special session of National Trade Union Federation at

its Calcutta Session. They strongly recommended that the Constitution

Act should contain a declaration of fundamental rights guaranteed to the

workers. But in almost all discussions generally, there was a strong

opposition to declaration of fundamental rights especially when there

would be no effective machinery for enforcing them.

25. Report on Indian Constitutional Committee1917-1918.

26. National Trade Union Federation Memorandum, pp.2213-2214 and Appendix A, Evidence, Indian Constitutional Reforms, Vol.12, pp.1932-33.


120

Chapter-4

Apart from the discussion and memorandum submitted on the

subject of fundamental right at the London Round Table Conference

Sessions and at the meeting of Joint Committee on Constitutional

Reforms, the Indian National Congress also passed a resolution on

declaration of fundamental rights at its 45th Session held in Karachi in

March27 and it was modified in its 47th Session in Calcutta in 193328

and adopted under the heading “Fundamental Rights and Duties and

Economic Programme”. It was based on the ideology that in order to

end exploitation of the masses, political freedom must include real

economic freedom of the starving millions. The resolution was

divided under different heads and one among them related to labour.

The rights of labour expressed in the resolution included securing

decent standard of living, suitable legislation for securing living wage,

healthy conditions of work, limited hours of labour, suitable dispute

settlement machineries and maternity leave to women workers,

protection against the economic consequence of old age, sickness and

unemployment including protection of right to form unions29.

This resolution expressed the main rights required or demanded by

labour. It was comprehensive in character and reflected rights,

economic, political and social in conformity with principle of justice.

A decade after, for the incorporation of fundamental right in

Government of India Act, 1935, it was again discussed by special

27. See http://education.nic.in/cd50years/12/8I/6E/8I6E0H01.htm 28. http://education.nic.in/cd50years/12/8I/6E/8I6E0H01.htm

29. www.indianyouthcongress.in/history045.htm


121

Chapter-4

committee in 1945 for the purpose of collecting information regarding

the future constitutional set up for India. A questionnaire was issued by

the Committee. The first questionnaire was—“What are the

fundamental rights which should be incorporated in future Constitution

of India? What machinery would you suggest for the enforcement of

such of those rights as are not justiciable or enforceable by court of

law?30

Answers were submitted by several associations and individuals. It

is worth to note the memorandum submitted by Prof.M.Venkitarangaiah

among those submitted by individuals. It mentioned the distinction that

was to be made between civil rights on the one hand and social and

economic rights on the other. He wanted the incorporation of the two sets

of rights in the Constitution, the former being enforceable in the courts of

law and the latter not. He gave reasons for the distinction between the two

sets of rights, the difficulties involved in respect of non-justifiable rights

and the utility of social and economic rights in the constitutional set up.

According to Mr.Venkitarangaiah, the rights in non-justifiable

character ought to be enforced because it involves positive action by

state-legislature and administration and required large financial

resources. He again explained that the rights not justiciable, were not

ineffective as rights but “while enforcing some rights we have to look to

courts and for enforcing others, we have to look into other political

institutions”.31

30. Constituent Assembly Debates, Volume II, http://parliamentofindia.nic.in/ls/debates/

vol7p1d.htm

31. Ibid.


122

Chapter-4

Sapru Committee finally in its “Constitutional Proposals”

recommended that the declaration of fundamental rights was absolutely

necessary for India not only for prescribing a standard of concept for

legislatures, government and the courts but the rights must be divided into

two (i) justiciable and (ii) non-justiciable and to provide suitable

machinery for enforcement of both.32 The importance of this

recommendation lies where both types of rights were recommended to be

included in the body of the Constitution.

Sri B.N.Rao, Member of Constituent Assembly made an elaborate

study of the fundamental rights to be embodied in the Constitution and

of making criteria for incorporation of the same in the Constitution. He

came to the conclusion that the chapter on Fundamental Rights be

divided into Part A & B for the draft scheme placed before the members

of Constitutional Assembly. According to him, Part A must be the

fundamental principle of state policy and those were non-justiciable.

The scheme he placed before members of Constitutional Assembly

included—

“6. The state shall as far as possible, secure to each citizen;

(1) the right to work; (2) right to education; (3) right to maintain

in old age and during sickness or loss of capacity to work; (4)

right to rest and leisure.

7. The state shall ensure that the strength and health of

workers, men and women and tender age of children shall not

32. Ibid.


123

Chapter-4

be abused and that they shall not be forced by economic

necessity to take up occupations related to their sex, age or

strength”33 and observed, “… none of the above provisions is

stable for enforcement by the courts”34 and has given the

status only as ‘moral precepts having education value”.35

The Fundamental Rights Sub-Committee recorded that a

difference should be drawn in the list of fundamental right between

rights which were enforceable by appropriate legal process and

provision which were in the nature of fundamental principles of

social policy that was to regulate the governments concerned.36

During the constituent assembly debates the word “fundamental’ was

replaced by ‘directive’ and Part II of Sir B.N.Rao’s draft was placed

as “Fundamental Rights including Directive Principles of State

Policy”.37

The above stated brief history showed that the right of workers

including social security was demanded to be included in Constitution

as fundamental right but the nature of the right and the difficulty in its

enforceability made its position in the subordinate category of non-

justiciable right. Matters relating to Social Security are listed in the

Directive Principles of State Policy and the subjects in the Concurrent

33. Reading the nature of the rights Sir B.N.Rao, Constitutional Precedents,( 3rd series) 1947, p.21.

34. Id. at p.22. 35. Ibid. 36. Markandan K.C., Directive Principles in the Indian Constitution, Allied Publishers Pvt.

Ltd.,Bombay, (1966), p.62.

37. Id. at p.79.


124

Chapter-4

List38. The provisions contained in Fundamental Rights and Directive

Principles39 of Constitution helped a lot for providing facilities to

workmen and making effective provisions of public assistance.

Soon after the commencement of the Constitution, Five Year Plans

were introduced in India in order to ensure social justice and better

standard of life to the people.40 In 195441, India declared as it adopted a

socialistic pattern of society and this reshaped the labour policy.

In 1952, the Employees Provident Fund Act was passed on the

basis of experience of provident fund schemes of coal mine workers and

constant demand from employees. The Act provided for old age,

invalidity and survivorship benefits to the workforce in the organized

sector.42 The Act now covers factories and establishments employing 20

or more employees in scheduled industries and other establishments

notified by Central Government. The employees drawing salary up to

38. The social security issues mentioned in the Concurrent List viz.,List III in the Seventh

Schedule of the Constitution of India are Item No. 23: Social Security and insurance, employment and unemployment. Item No. 24: Welfare of Labour including conditions of work, Provident funds, employers’ liability, workmen’s compensation, invalidity and old age pension and maternity benefits.

39. Article 41 Right to work, to education and to public assistance in certain cases The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases ofunemployment, old age, sickness and disablement, and in other cases of undeserved want.

Article 42 Provision for just and humane conditions of work and maternity relief The State shall make provision for securing just and humane conditions of work and for maternity relief

,

40. Government of India, Planning Commission, First Five Year Plan.

41. Constititution was amended and added the word‘socialist’ to the preamble

42. The Amendment in 1976 extended the benefits and in 1982 extended to establishments employing 1000 or more workers.


125

Chapter-4

Rs.6500/- per month are covered under the Act. There is a provision for

voluntary coverage of a person even after he crosses the ceiling.43

Another social security measure in the form of benefit against

unemployment was adopted in 1953 when an ordinance44 provided for

lay-off and retrenchment compensation to industrial workers. The

scope of unemployment benefit was extended after amendment in 1956

and 1957 to provide for compensation to workmen on transfer or

closure of undertakings.45 Retrenchment covers all termination of

workmen other than through voluntary retirement, superannuation,

termination of the service of the workmen, after an expiry of an

employment contract and termination on the basis of continued illness

of workmen.46

The Maternity Benefit Act was passed in 1961 replacing all state

laws on this subject.47 It applies to all establishments, factories,

plantations and shops where 10 or more persons are employed.

Maternity benefits are also provided under ESI Act and an insured

woman is entitled to maternity benefit in the form of periodical

43. During 1952, this Act covered 1.2 million workers employed in about 1400

establishments in 6 major industries, and in 1991 the Act covered 21.2 million workers in 2,99,000 establishments covering 177 industries.

44. 1971 Amendment in the Act provided for family pension and 1976 Amendment for Employees Deposit Linked Pension Scheme.

45. Labour Industrial Dispute Amendment Act, 1953 that amended the industrial Disputes Act, 1947.

46. 25-C of Industrial Disputes Act laid off workmen are entitled to a compensation equal to 50% of the total basic wages and dearness allowance for the laid-off period and in case of retrenchment workers have to be paid 15 days wages for every completed year of continuous service or any part there of in excess of six months.

47. It was again amended in 1973 & 1976 to enlarge its scope.


126

Chapter-4

payments in case of confinement, miscarriage or sickness arising out of

pregnancy. They are also entitled to medical care under the ESI scheme

for maternity. The factories or establishment to which the provisions of

ESI scheme apply are excluded from the purview of Maternity Benefit

Act. But high salaried women above the wage ceiling under ESI Act

are entitled to be benefited under this Act. There is no wage limit for

coverage under the Maternity Benefit Act. The provisions under ESI

Act for medical benefit are more comprehensive as they include

medical care and maternity benefit than provision under Maternity

Benefit Act.

Though in 1957 a study group on social security to work out a

comprehensive social security scheme was appointed, their

recommendations48 could not make any impact. Hence in 1966, a

Committee on Labour Welfare and National Commission on Labour was

appointed. The Committee on Labour Welfare was set up for examining

the functioning of various welfare schemes in operation in industrial

establishments and to suggest improvements. Both the Committee and the

Commission submitted detailed reports in 1969. Apart from these

legislative efforts, Committees and Commissions, a key role is seen

played by Planning Commission.

4.3 Labour Policy; Social Security and Five Year Plans

The First Five Year Plan49 dealt with labour and industrial

relations with a humanistic approach. It recognized the importance of

48. Recommendation of Study Group on Social Security, Government of India, 1957.

49. Government of India, Planning Commission, First Five Year Plan (1951-1956).


127

Chapter-4

labour in the fulfillment of the targets of the plan and creating an

economic order in the country. With this view, the first plan associated

certain rights and obligations with the role which labour had to play.50

The rights included factors like adequate provision for the basic need of

the workers in respect of food, clothing and shelter so as to enable them

to remain healthy and efficient, provision for improved health

conditions, wider provision for social security, better educational

opportunities and increased recreational and cultural facilities;

conditions of work that would safeguard the worker’s health and

protection against occupational hazards, right to organize and to take

lawful action in furtherance of their rights and interests. The plan called

upon labour to realize the fact that in an undeveloped economy, it

cannot build for itself but they have to make a substantial

contribution51. This will ultimately lead to peaceful industrial relations.

In the Plan, right to strike and lock out was recognized. Just

settlement of claims was also given emphasis. The Commission also

accepted the importance of conciliation and arbitration in dispute

resolution and duty of state to provide machinery for settlement of

disputes. The plan envisaged for establishing a tripartite body for

determining norms and standards, standardization of wages with

principles of social policy, profit sharing, permanent wage boards etc.

Above all, a full and effective implementation of minimum wage

legislations was the main recommendations in First Five Year Plan. The

50. Supra n. 2 at p.22.

51. The report said that, the working class performance functions vital to the maintenance of the community’s economic life.


128

Chapter-4

plan also stressed on improving working conditions of labour and for that

purpose implementing legislation ie., Factories Act, Mines Act, Plantation

Act, Shops and Establishment Act etc. The plan assured:

“having placed his assets labour and skill at the disposal of

the community, he should be assured for a reasonable

measure of security against various natural and other risks to

which he is exposed.52

Second Five Year Plan dealt with employment aspects in its

Chapter 5. This plan gave importance to the employment opportunities

with an objective of maximizing rate of growth output through the

utilization of available resources as a means for economic development.

The task is divided into three, firstly about providing employment

opportunities for the existing urban and rural growth, secondly,

providing natural increase in the labour force and lastly about those

underemployed in agriculture and household activities to be provided

with increased work opportunities.53

With the adoption of the policy of socialistic pattern of society, the

labour policy in the Second Plan was accordingly influenced. The

Second Plan recognized that the goal of progressively speeding up

production would mean that indiscipline, stoppage of production and

indifferent quality of work would have to be guarded against. The Plan

placed greater emphasize on mutual negotiations and voluntary

arbitration in improving employer-employee relations. Important

52. Ibid.

53. Government of India, Planning Commission, Second Five Year Plan (1956-1961).


129

Chapter-4

development took place in the acceptance of Code of Discipline (1958)

laying down specific obligation for the management and workers i.e.,

instituting programmes for worker’s education (1958), establishment of

wage boards (1960), for fixation of wages etc.54 The main emphasis of

the Second Five Year Plan was on the problem of unemployment and

under employment. The plan gave high priority to the development of

large scale joint stock enterprises on the one hand and village and small

scale industries on the other for solving the unemployment problem.55

During the Third Plan, apart from the fuller implementation of the

schemes drawn up in the first two plans, social security measures were

taken into consideration. The Third Five Year Plan declares the labour

policy by emphasizing states’ responsibility in providing facilities and

co-operative arrangements for settling disputes. It visualized that “the

object is to secure not peace alone but higher levels of industrial

efficiency and rising standard of life of working class”56. Payment of

Bonus Act, 1965; Shops and Commercial Establishments Acts in

different states57, Labour Welfare Funds Acts58 in many states were

some remarkable improvements during this plan period. National

Safety Council was set up in 1966. Under Minimum Wages Act, 1948,

minimum wages were fixed and periodically revised by state

governments in respect of various agricultural and other trades. The

54. Supra n.2 at p.22.

55. Id. at p.50.

56. Government of India, Planning Commission, Third Five Year Plan(1961-1966)

57. In Kerala in 1960 , in Uttar Pradesh 1962, Punjab 1958, Himachal Pradesh 1969 etc.

58. In Karnataka 1965, in Bombay 1965 etc.


130

Chapter-4

First National Commission on Labour was also set up under this Plan.

This was the first step in independent India that envisaged a

comprehensive study for finding out the labour problems, its causes and

remedies.

The Fourth Plan59 analysed the ESI Scheme, industrial training to

craftsmen, employees provident fund scheme and found that these

expanded steadily. This plan recommended for adoption of the ideology

of ILO that includes “development involving comprehensive programs of

rural development, labour intensive public work programmes and fuller

utilization of industrial capacity, promotion of labour intensive products

in domestic and foreign markets and application of economically sound

labour intensive techniques in industrial production.60 Such investment

plan will need more investment in human as compared to physical

capital.61 More stress was given to rural development and small scale

industries and the strategy of development envisaged in Fourth Plan was

broadly in conformity with this. The plan also envisaged the creation of

new employment opportunities and improvement in wages of those who

were already employed in different sectors.

The Sixth Five Year Plan recognized that the time had come when

labour policy should be much more concerned with the interests of vast

masses of workers who are outside the organized sector and are unable 59. Government of India, Planning Commission, Fourth Five Yean Plan (1969-1974).

60. In the report of UNEP, the ILO has forcefully agreed for the integration of employment creation to economic development through the maximum possible productive resources available labour to accelerate economic growth and more particularly, to substitute labour for scarce capital where there is economically feasible.

61. Id at chapter 22, p.429.


131

Chapter-4

to protect their interests. The plan spoke about industrial policy i.e.,

‘industrial development policy’ in a developing country like India has

to meet two conflicting requirements. It must protect the right of the

working class to organize and to struggle for its economic and social

betterment by all democratic and legal means.62 At the same time, it

must ensure the steady growth of investment and production at a

satisfactory rate. Acceptance of priority of collective bargaining as the

main mode of dispute settlement and protection of right to strike of

workers were the proposals under this plan for concretizing the good

industrial relationship.63 At the same time means to avoid strike i.e.,

notice, consultation and arbitration were also given importance. The

plan also envisaged for extension of benefit of minimum wages to more

beneficiaries, revising wage policy assuring similar wages for similar

work, worker’s share in profit and income, expansion of working of

National Safety Councils and National Council for Safety in Mines.

The Plan discussed social security of workers under Employees

State Insurance Act, 1948; Employees Provident Fund and

Miscellaneous Provisions Act, 1948; Payment of Gratuity Act, 1947

and Family Pension Scheme.64 The Plan envisaged for expansion of

coverage of these Acts not only to factories employing 10 to 19 persons

using power but also to shops, hotels, restaurants, cinemas, theatres,

motor transport and news paper establishments employing 20 workers 62. Ibid.

63. The plan says the right to workers is to be protected otherwise bilateral collective bargaining is deprived of its ultimate sanction from worker’s point of view.

64. Government of India Planning Commission, Fourth Five Year Plan (1978-1983), Chapter 2, p.172.


132

Chapter-4

or more. With regard to women labourers, the plan recommended for

application of Equal Remuneration Act to all branches of employment

to eliminate discrimination against women and to set up Advisory

Committees in all states to implement the Act. The plan emphasized

the proper enforcement of existing provisions requiring crèches or child

care units within establishments in order to cover children of working

mothers.

The plan realized that there was no shortcut to the elimination of

child labour in an economy where poverty and unemployment forced

families to divert their children from education to the supplement their

family income. The only way is to raise the income of the families

through employment and anti-poverty programmes. The plan also

recommended for National Committee on child labour to examine the

adequacy and implementation of the present legislation relating to child

labour and to suggest welfare measures for the benefit of employed

children and also for a Child Labour Cell in Ministry of Labour to

formulate, co-ordinate and implement policies and programmes for the

welfare of employed children and to indicate follow up action on the

sections of the Child Labour Committee.

The Seventh Five Year Plan65 dealt with in detail employment,

manpower planning and labour policy in chapter 5. In the Seventh Five

Year Plan there is a shift in ideology of employment and manpower policy

from basic approach to the concept of productive employment. The task is

found with adopting a suitable structure of investment and production,

65. Seventh Five Year Plan, (1974-75).


133

Chapter-4

appropriate types of technology and mix of production technique and

organizational support which would help the promotion of growth in

productive employment. There must be suitable arrangements and

adjustment of policies in terms of education, training and retraining and

reorientation of workers in order to avoid dislocation effects and make the

process of technology adoption smooth. The Plan analysed the

employment generation achievements in Sixth Plan period and found that

there was expansion.66

The Seventh Plan recognized that the labour entered the

production process from the supply side as well as from the demand

side and the thrust of Seventh Plan was an improvement in capacity

utilization, efficiency and productivity.67 This plan has given emphasis

to industrial safety and required constant attention due to its significant

impact on the working conditions and welfare of workers and also on

the production mechanism. This plan also discussed wage policy and

found that wage factor depended on related elements like allowances,

bonus, social security and fringe benefits. With regard to the

unorganized sector, efforts are suggested to be made not only to train to

upgrade skills of the workers but also to educate them and make them

aware of the pragmatic and legislative provisions available to them.

With regard to women workers, the plan gave special recognition and

made provisions for requisite facilities for bringing them into the

mainstream of economic growth. 66. Apart from sectoral investments, the oriented programmes like NREP, IRDP, RLEGP,

and TRYSEM resulted in expansion of employment opportunities.

67. Government of India, Planning Commission, Seventh Five Year Plan, Chapter ‘Employment-Power, Plans and Labour Policy’, pp.1-9.


134

Chapter-4

The objective in the Eighth Plan was treating employment generation

and economic growth as complementary rather than conflicting processes.

The plan took the aspect of need of important scrutiny in the impact of

macro-economic, sectoral and labour policies on employment.

The plan also discussed elaborately the existing labour policies, in

the context of economic reforms. It was pointed out that capital and

labour policies are not always employment friendly. The plan found

that the labour policy as manifest in certain labour laws and labour

market rigidities rendering wage mechanism ineffective, has introduced

a degree of inflexibility in labour use thus “discouraging employment

expansion particularly in the large scale industries”.68 The plan also

discussed the unorganized sector where majority of workers belong and

found employment in that sector, not only completely insecure but also

devoid of any social security provisions i.e., “high degree protection for

minimum scale proportion of the work force and complete lack of

protection for the majority of workers”.69

The shift from long protected non-competitive economy to

increasingly competitive market occurred during Ninth Plan period.70

Appreciating the encouraging results of these reforms, the plan

document observed that Indian economy has responded well to the

change in policy direction.71 68. Government of India, Planning Commission, Eighth Five Year Plan (1992-97), Chapter 6,

p.116.

69. Id at p.117. 70. 1997-2002.

71. N.Jetli, India: Economic Reforms and Labour Policy, New Century Publications, New Delhi, (2004), p.16.


135

Chapter-4

The Tenth Plan72as approved by National Development Council

(NDC) envisaged an annual growth of 8% which is higher than 5.5%

achieved during the Ninth Five Year Plan period. The plan targeted 10

million employment opportunities per year over Tenth Plan period. The

plan especially emphasised on social security and framed a working

group. The report73 elaborately discussed the present system of social

security in India. The objective of this plan was to support attainment

of economic and social objective in labour sector through a set of

strategies. It is believed that a reasonable return to labour is facilitated

by labour laws including provisions for social security to workers.

According to the plan, job is the best guarantee for those who are not

covered by social security laws74. In the plan it has been stated that the

labour market is found moving in a direction that change over of jobs

by an individual will become more frequent. Public sector which

provides comprehensive social security cover to its employees has been

shrinking in size, the pension system of government employees be kept

under review. The Plan envisaged that to reach out to the entire labour

force employed, many of the existing institutions, laws and programmes

including those on social security have to be restructured.

4.4 Conclusion

The historical over view of labour jurisprudence in India reveals

the fact that social security is not an alien concept in India. It was in 72. (2002-2007) period.

73. Report of the Working Group on Social Security for the Tenth Five Year Plan (2002-2007), Government of India, Planning Commission, October, 2001.

74. As stated in the Plan, out of about 400 million workers in the country only around 50 to 60 million are covered by some form of social security.


136

Chapter-4

existence as a part of family or religious institution. The development of

industrial jurisprudence influenced India also and thus the modern

approach to social security moved slowly to India. The growth was

stage by stage i.e as a preliminary period and then, a period of

conscious planning. Before independence the enactments relating to

social security were made for certain category of workers only. The

framers of the Constitution of India had given significance to the

provisions relating to social security of labour while framing the

Constitution. Later in all policies in the governance of the country,

social security to worker was a concern of the government.

….... …....

social security in inda: historical development and labour...

Documents